TMI Blog2007 (1) TMI 239X X X X Extracts X X X X X X X X Extracts X X X X ..... s at Rs. 72,28,175 in respect of transfer of the theatre building by demolishing the same and constructing a commercial structure on that through one M/s. Sapna Real Estates. Earlier one Cinema Hall in the name of "Cine El Dorado" was in existence and belonged to Mavany family. The dispute arose between the late Shri Leelali Mavany and late Shri. Tajdin Mavany which was resolved by a family settlement reached on 8-8-1995. As per the family settlement, 70 per cent of the share of the building of Cinema Theatre was allocated to Altaf Leelali Mavany, legal heir of late Shri Leelai Mavany and 30 per cent of shares were allocated to six legal heirs of late Shri Tajdin Mavany. These seven persons entered into a partnership agreement on 8-8-1995 determining the share ratio in proportion to their respective rights in the theatre property. On the very same day, a contract for restructuring, reconstruction, remodelling and development of the premises was also executed between the assessee- firm and M/s. Sapna Real Estates (hereinafter called 'Developer'), according to which, the Developer was to pay Rs. 66 lakhs to the assessee and 35 per cent of the developed property in lieu of 65 per cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-tax Act, the transfer took place on 8-8-1995 i.e., the date of contract between the assessee and the builders-cum-developers, namely, M/s. Sapna Real Estates. The claim of the assessee that the transaction had resulted into capital loss of Rs. 13,78,795 was also rejected. 3. On appeal, the ld. CIT(A) confirmed the action of the Assessing Officer and upheld the reopening of the assessment under section 147 of the Act. 4. During the course of hearing before us, the ld. Counsel for the assessee reiterated the submissions taken before the lower authorities which are summarized below:- (i) The sum of Rs. 66 lakhs paid by the Developer to the persons other than the assessee was consideration for their interest in the property agreed to be surrendered by them in favour of the Developer directly. (ii) The Assessing Officer estimated the cost of construction on enquiry which were extraneous to the facts before him and no adequate opportunity was given to the assessee on this point. (iii) The theatre along with the land was not transferred within the meaning of section 2(47) of the Income-tax Act because no consideration or lawful possession was given to the assessee bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the record of the Assessing Officer i.e., on 8-9-2004 did not necessarily mean that the relevant original return was not available on 13-11-2000, i.e., the date of issue of notice under section 148 of the Act. (d) The Assessing Officer had recorded the detailed reasons that the capital gain on the transfer of the property bad not been declared by the assessee as per contract dated 8-8-1995 and that the transfer had taken place in the assessment year 1996-97 and income had escaped assessment for that assessment year. (e) It was clear from the impugned order of assessment under section 143(3), read with section 147 that the original return had been processed under section 143(1) of the Act and the subsequent furnishing of copies of profit and loss account and balance sheet by the assessee while removing the defect in the return filed on 30-11-2000 in response to the notice under section 148, could not give rise to a reasonable inference that the original return was not available with the Assessing Officer at the time of reopening of the assessment under section 147 issuing notice under section 148 of the Act. (f) The confidential report of the DDIT which formed the basis of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lared by it. The submissions of the ld. Counsel of the assessee are same as taken before the lower authorities. The ld. Departmental Representative supported the orders of the lower authorities. 10. In our considered opinion (1) the theatre property was transferred to the Developer as per agreement dated 8-8-1995 in view of the provisions of section 2(47) of the Act because the Developer was given a right to demolish the existing structure of the Cinema Hall and carry out the development and construction work for the new commercial complex. (2) The property was transferred by the assessee-firm constituted on 8-8-1995 for a consideration of Rs. 66 lakhs as initial payment and35 per cent of the newly constructed premises. (3) The payment of Rs. 66lakhs to the outgoing partners being the legal heirs of late Shri Tajdin Mavany, was only an application of the funds receivable by the assessee as part of the contract to transfer property and direct payment of the amount by the assessee to these partners was on behalf of the assessee because the amount was duly entered into the books of account of the assessee. (4) The capital gain was, therefore, liable to be assessed in the hands ..... X X X X Extracts X X X X X X X X Extracts X X X X
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